Rightmove comment on Bank of England Base Rate rise

Rightmove’s mortgage expert Matt Smith says: “Over the last couple of weeks, average fixed-rate mortgages have been slowly edging up in anticipation of today’s rise of 0.25% in the Bank of England Base Rate. There is unlikely to be any immediate changes in lender rates based on today’s decision, and lenders are instead likely to wait to see what the impact of the Bank’s comments on the outlook of the economy have on swap rates. An average five-year fixed 85% Loan-To-Value mortgage rate is now 4.52%, up from 4.44% last week.

“To put this into context, this amounts to a difference of £14 a month for someone purchasing an average property and spreading the cost over 25 years. So, while we may continue to see fixed-deals fluctuate slightly up or down in the short-term, buyers coming to market soon may find that the amount they need to repay each month doesn’t change significantly.

“Those on a tracker mortgage will be more disappointed with today’s news, as they may have thought that the Base Rate had peaked in March given some of the positive signs for the wider economy, and this is another cost they will need to factor into their monthly budget when the full rate rise is passed on.

“Buyer demand is now higher than pre-pandemic levels, most notably in the typical first-time buyer sector, so it is likely we will see lenders try to remain competitive to meet this demand. We’re also starting to see creative ways some lenders are trying to help segments of the market get onto the ladder with the launch of Skipton Building Society’s 100% mortgage product. While it is clearly designed to target a very specific segment of the first-time buyer market, given the affordability challenges many first-time buyers face, short-term innovations such as this are welcome to try and help more would-be first-time buyers own a home.”